Up to firms how to use tax cut: Treasurer

Treasurer Scott Morrison has rejected forcing businesses to pass on tax cuts to workers through wage rises as a “highly regulated approach”.

As the Turnbull government pushes ahead with plans to extend corporate tax cuts to companies with turnover above $50 million, Commonwealth Bank chief economist Michael Blythe has suggested politicians should consider striking a deal with business to guarantee wages growth.

He cited the example of Japan, where the government is cutting taxes from 30 per cent to 20 per cent for businesses that aggressively raise wages and increase capital investment.

But Mr Morrison said every Australian business would have a different response to tax cuts.

“They would be able to outline what they believe they would do in the event of the tax package passing the parliament,” he told ABC radio.

“What I want to see is businesses being able to pay their employees more and they’re not going to be able to do that if they’re kept on a high-tax island.”

Deputy Labor leader Tanya Plibersek says the treasurer’s assumption lower taxes will translate into higher wages or more jobs was not borne out by past events.

“Our recent history is that Australian companies are very profitable, they’re not passing that on as wages increases,” she told ABC radio.

Debate on reducing the company tax rate from 30 per cent to 25 per cent for all business is due to resume in parliament on Tuesday.

With Labor still opposed to the cuts, the government will have to rely on the Senate crossbench to pass its legislation.

Finance Minister Mathias Cormann said the coalition remained “utterly committed” to tax cuts.

“Bill Shorten is trying to make it harder for businesses to be successful, pursuing the politics of envy which inevitably would lead to less investment, lower growth, fewer jobs, high unemployment and lower wages,” he told The West Australian.

A left-leaning think tank, The Australia Institute, has produced a new poll showing fewer than one-in-five (18 per cent) Australians support a reduction in the company tax rate.

If it wins government, Labor plans to a “living wage” policy, rather a minimum wage.

The Australian Chamber of Commerce and Industry estimates a living wage – based on an ACTU claim for a minimum wage increase of 6.5 per cent – would cost up to $8 billion a year.

Labor workplace spokesman Brendan O’Connor said he didn’t know whether the business group’s figures were right but is open to debating the issue with employers and unions.

“We are very concerned that wage growth is flatlining, which is hurting workers and it’s hurting the economy,” Mr O’Connor told Sky News.